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� Discover...a simple, highly effectivechange program that hascreated huge payoffs forGeneral Electric, HomeDepot, Sears, and GeneralMotors.

� Unleash...Work-Out to break downhierarchy, eleiminate use-less meetings, reduce costs,speed cycle times, andincrease profits.

� Build...a fast-paced innovativeculture, develop leaderswho make quick decisions,and create an empoweredworkforce.

� Learn...each of the steps and rolesinvolved in planning, con-ducting, and implementing aWork-Out at your business.

� Overcome...resistance within the organi-zation by linking Work-Outto other change programs,modeling the change, andfocusing on the payoff.

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The GE Work-OutHow to Implement GE’s Revolutionary Method for

Busting Bureaucracy and Attacking Organizational

Problems — Fast!by Dave Ulrich, Steve Kerr, and Ron Ashkenas

with Debbie Burke and Patrice Murphy

A summary of the original text.

GE is one of the mostsuccessful companies

in the world, with businessesranging from jet engines tolight bulbs to credit cards. Yetevery day, thousands of peopleat GE face the same problemsthat confront every other busi-ness in the world. What's thebest way to deliver productsand services to our customers?How can we improve our mar-gins? How do we stay aheadof the competition? How can we make the best use oftechnology? How do we movequickly to new opportunities?

GE does not have all theanswers to these questions,but it does have a superbprocess for confronting eachchallenge — quickly, simply,and with the involvement ofthe people who will carry outthe decision. That process iscalled "Work-Out," because itaims to get unproductive workout of the system.

Our discussion of Work-Out is

divided into seven parts:

• Section 1 outlines theprocess and the benefitsthat it provides.

• Section 2 helps you prepare for the normalskepticism and resistanceto change that is sure toarise.

• Section 3 gives you anoverview of the Work-Outprocess and how to plan abasic Work-Out.

• Section 4 covers the fivebasic steps in conductinga Work-Out.

• Section 5 covers the fourbasic elements of a suc-cessful Implementation.

• Section 6 shows you howto customize Work-Out tofulfill your organization’soperational needs.

• Section 7 gives you the

Volume 11, No. 7 (2 sections). Section 2, July 2002© 2002 Audio-Tech Business Book Summaries 11-14.No part of this publication may be used or reproducedin any manner whatsoever without written permission.

To order additional copies of this summary, referenceCatalog #7022.

secrets to making Work-Out pay off for the longterm by creating newleadership and a new culture.

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1. WHAT IS WORK-OUT?

Work-Out is a simple,straightforward methodologyfor cutting bureaucracy andsolving problems quickly. Itsgenius lies in harnessing theintelligence of workers closestto a problem.

The problem can be of almostany type. Work-Out was firstused at GE to harvest the low-hanging fruit of overgrownbureaucracies by reducingmeetings, reports, and thenumber of approvals needed tomake a decision. It can alsobe used to cut in half processtimes in product development,order entry, employee commu-nications, and more. Or,Work-Out can be used to bringyour people together with customers or suppliers todevelop innovative ways ofdoing business together.

No matter what the challenge,the process remains the same,with four basic steps:

1. Bring together the peoplewho know the issues best.

2. Challenge them to developcreative solutions.

3. Make yes or no decisionson the solutions immedi-ately in a public forum.

4. Empower people to carryout the solutions.

For example, one of the earli-est Work-Outs at GE Capitalfocused on finding and gettingrid of procedures that get in

the way of doing business andserving customers. After anintroduction by the ChiefFinancial Officer and an outside consultant, 40 peoplefrom various businesses andfunctions within GE Capitalbroke into small groups andstarted brainstorming. Whatprocedures didn't make sense?Where were they wastingtime? What activities addedthe least value?

The CFO expected very littleto come out of the discussion.GE Capital was one of thecompany's fastest-moving,least bureaucratic units. Itwasn't a tired old businesswith 100 years of outdatedprocedures.

But to his amazement, theparticipants filled countlesspages with notes about areasthat needed to be improved.The facilitators asked the CFOto leave, and then the groupdivided the ideas into threethemes: expense approvalsand reimbursements; materi-als purchasing; and dealanalysis and approvals.

The participants split intothree groups to work on eachissue. They spent the rest ofthe day selecting the ideasthat were worth pursuing, andestimated how much money ortime the change would save.

The next day, the three groupsmet together to discuss theirrecommendations. Afterlunch, the CFO returned,along with several senior GECapital managers. For sever-al hours, all 40 participantstalked through the ideas oneat a time in a "Town Meeting."After each idea was discussed,the CFO had to say "yes" or"no" immediately.

As a result of this Work-Out,

GE Capital got rid of severaltime-consuming, money-wasting activities on the spot.Expense reports no longerneeded multiple approvals.People could purchaseapproved software withoutgoing through the IT organiza-tion. And a pre-deal processwas established to see if deals were worth pursuing,before going through all theanalytics.

At GE and at other firms thatuse it, Work-Out is more thana way to solve problems. Italso creates an empoweredworkforce, because employeescan see that their ideas makean impact. Work-Out alsohelps to build a culture that is fast-moving, focused oninnovation, and unconcernedwith boundaries. Plus, itdevelops leaders who listen to workers and make quickdecisions, rather than hidingin their offices. All of thesebenefits have given GE thefoundation to roll out otherinitiatives, such as Six Sigmaand e-commerce.

The company has held literal-ly hundreds of thousands of Town Meetings to makequick decisions on solutions toproblems. Welch and manyoutside observers believe thatthe program is an unqualifiedsuccess, but there are no hardnumbers to back up thatclaim. Welch always refusedto measure Work-Out, sayingit would die if he started tomeasure and track the resultsit was producing. Instead, hesaid he would know "in hisgut" when it was working andwhen it was not.

Many other companies thathave used Work-Out havemeasured the results. Forexample, Zurich FinancialServices U.K. had used

2 A U D I O - T E C H

hundreds of Work-Outs by theend of 2001, involving half ofthe firm's 6,000 employees.The verified savings over thepreceding four years totaledmore than $100 million, andcame from every part of thecompany. In addition, thecompany achieved gains incustomer service, productdevelopment, and processimprovement.

Whether its impact is mea-sured at the gut level or on aspreadsheet, Work-Out winsover CEOs because it helps acompany return to the way inwhich decisions were made inits early days. In small start-up organizations, the foundersand "first-generation" employ-ees have an entrepreneurialspirit: They focus on the tasksthat, with or without titles,need to be accomplished.

As the organization grows anddevelops, internal relation-ships became more definedand formalized. This changeis necessary, but over time thestructure becomes rigid andinflexible, creating more"make-work" and impedinginnovation, and turning thefocus inward instead of out-ward, to the customer and themarketplace. This structureleads to inefficiency and lowerproductivity.

Work-Out reverses thisprocess by forcing the organi-zation back to an earlierstage, where greater speed,flexibility, innovative spirit,and communication across levels previously existed. Itbreaks down barriers thathave slowly and imperceptiblybeen built up over time, often helping companies savemillions of dollars in costs.

It's important to keep in mindthat Work-Out is not just a

cost-cutting process. It alsocan help companies growalong five key dimensions:First, it provides a focus onstretch. By forcing people torethink what they are doing,it also encourages them tostretch to a goal or challengethat is significantly beyondtheir current performancelevel. For example, thestretch goal might be to cutthe time to develop a newproduct in half, or to reducethe number of customer com-plaints by 30 percent in thenext year.

Second, Work-Out helps companies to develop systemsthinking. Work-Out encour-ages people to take a systemsperspective because few reallysubstantial changes take placein a vacuum. In the initialdesign phase of Work-Out, the design team creates acomprehensive map thatdescribes the steps, processes,and subprocesses involved inproducing current results.This map enables the team toidentify multiple points offocus for the Work-Out. Insubsequent sessions, facilita-tors help cross-functionalteams create increasinglydetailed process maps that

enable participants from dif-ferent functions to gain abroader systems perspective.

Third, Work-Out encourageslateral thinking. With theprocess map as a startingpoint, participants brainstormways to achieve the goal andsort through ideas, select thebest ones, and develop theminto recommendations. Work-Out begins by focusing on the"low-hanging fruit," the easyfixes that can be made to vir-tually any process. Everyorganization develops clutteror inefficiency over time.Work-Out calls theseRAMMPP inefficiencies, shortfor reports, approvals, meet-ings, measures, policies, andpractices. These are relativelyeasy to find and remove.

The simple RAMMPP Matrixillustrated below lists eachtype of clutter and the placeswhere it might exist, such asin your job, your department,group, company, or in externalprocesses. For each RAMMPactivity, look for ways to getwork out of it. For example,identify any meeting you could eliminate, schedule less often, finish in half thetime, hold with fewer people,

B U S I N E S S B O O K S U M M A R I E S 3

THE RAMMPP MATRIX

or replace with a more productive technology, such as videoconferencing.

In addition to generatingideas, Work-Out encouragesquick but critical analysis ofideas to select the most worth-while ones for action. Aftereach brainstorming session,participants use a Pay-OffMatrix, like the one illustrat-ed below, to think throughboth impact and achievability.It divides ideas by two crite-ria: "small pay-off" vs. "bigpay-off," and "easy to imple-ment" vs. "tough to imple-ment." The point is that anidea that might save millionsis worthless if it is impossibleto implement. However, anidea that offers a small pay-offcan make an impact if it canbe put into action quickly.

After lateral thinking, thefourth way in which Work-Outhelps companies grow is bycreating ownership. At theTown Meeting, each team canpresent a recommendationonly if a member is willing tobe "owner" of it — to takeresponsibility for driving itthrough to completion. Theowner mobilizes the resources,puts together a plan thateveryone agrees to, ensuresthat everyone does his or her

part, and is accountable tosenior management for thesuccess of the project.

Finally, the fifth way thatWork-Out promotes growth isthrough injection of rapid-cycle change and fast decision making. Most companies move slowly.Managers insulate themselvesfrom failure by relying on staffreports and analysts for adviceand support. For example, atthe old Allied SignalAutomotive Sector of GE,expenditures over $100,000required 26 signatures. Eachsign-off took an average offour days, for a total of morethan 21 weeks. At the TownMeeting, business leadershave to make decisions on the spot, without the usualcrutches of time, analysis,staff opinions, and deep consideration. Instead, thebusiness leader must listencarefully, ask questions, solicitviews from other people at the meeting, and then make a decision in a matter of minutes, rather than months.

Although Work-Out involvespeople in finding problemsand fixing them, it is just as likely as any other changeprogram to run into resis-tance. In the next section,

we'll discuss how you can recognize resistance and turnit into support.

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2. OVERCOMING RESISTANCE

Resistance to change is com-mon and understandable.Here are three of the mosttypical responses:

1. "Been there, done that."Most organizations havetried change programs. Ifthis is the problem, try tofind rationale for addingWork-Out as a way to create synergy amongexisting initiatives. Work-Out is not a program; it’sa methodology. It is notsomething you do; it’ssomething you use to bustbureaucracy, reduce costs,speed cycle times, orattack any other problemthat needs to be solved.

2. "We’re fresh out ofheroes around here."Some executives maythink they lack the skillsor personality to run aTown Meeting. However,there is no "right way" torun a meeting, and no onedoes it perfectly everytime. Remind them toapproach Work-Out as alearning experience, onein which they will get better as they go along. If necessary, the CEO can co-lead the sessionsfor the first couple of managers to serve as amodel for all of the othersto follow.

3. "We’re too small to tack-le such a monster." Ifthe time and costsinvolved in scheduling aWork-Out appear to be tooexpensive, focus on the

A U D I O - T E C H4

PAY-OFF MATRIX

pay-off. For example, aGE Capital Work-Outteam recommended sending automobile-fleet-leasing customers onlysummary reports ofmonthly usage, not all thebackup detail. The teamcalculated the cost savingsfrom paper and postage,computer time, and han-dling. The total savingsamounted to several hun-dred thousand dollars,which paid for the Work-Out session many timesover.

The best way to understandany change process, includingWork-Out, is to do it ratherthan talk about it. One use-ful, fast, and simple exercise,"Wasteful Work Practices"instinctively appeals to mostemployees. Each participantis given a worksheet on whichto list those parts of the dailyroutine that don’t make sense.Then, small groups are formedwhere participants share theirideas and generate additionalideas for the Wasteful WorkPractices list. Teams thenselect one or two of the bestideas and present them to thebusiness leader at the TownMeeting. This entire sessioncan be completed in a fewhours.

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3. PLANNING A WORK-OUT

Before getting into the specificsof planning a full-blown Work-Out, let's outline the overallprocess and the key players.

There are three main stages ofevery Work-Out:

• Planning includes identi-fying the problem, gettingupper-level organizationalsupport, organizing a plan

design team, and recruit-ing a cross-functionalteam.

• Conducting includesbrainstorming, idea evalu-ation, recommendations,and approval.

• Implementing includesputting the ideas intopractice with follow-upevaluation.

Now let's discuss the keyWork-Out roles and the mem-bers who perform them. We'llalso note which roles aremandatory and which ones areoptional.

Among the most importantleadership roles is that ofthe sponsor. This mandatoryrole is filled by the seniormanager responsible for allthe parts of the organizationinvolved in the Work-Out.

The sponsor may also fill therole of the champion. As aseparate role, it is optional.This individual represents thesponsor at the sessions andtakes responsibility for thedetailed preparation and fol-low-up to the session. Thechampion also organizes thereview sessions at 30, 60, and90 days after the TownMeeting.

The facilitation rolesinclude the Work-Out consul-tant. An individual who hasexperience with the processfills this mandatory role. Heor she helps the sponsor make initial decisions aboutobjectives and then workswith the sponsor and champi-on to design the session andorganize logistics.

The person who fills theoptional role of the analysthelps compile and prepare the

data given to team members.People should be trained inWork-Out methods to handlethe mandatory role of facilita-tors. Facilitators help the consultant prepare and runthe sessions, attend prelimi-nary briefing sessions with thelead facilitator, and meet withteam leaders to plan the teamsessions.

In addition, two optional rolescan add value to the Work-Outprocess, but are not essential.Expert resources are special-ists who are available duringsessions. The administratororganizes the logistics of theevent.

Participation roles includeteam leaders and team mem-bers. Team leaders areresponsible for preparing their team for sessions. Theyplay critical roles in all phasesof the Work-Out, providingleadership and communicationamong teams and team members.

Team members are at the coreof the entire process. Theygather data, do some prelimi-nary thinking, and are part ofthe team that solves the busi-ness problem. There are fouruseful criteria to considerwhen selecting team members:

1. Is there a need for thisparticular expertise?

2. Should the perspectives ofusers, recipients, and cus-tomers be built into theteam?

3. Who are the potentialimplementers of recommendations?

4. Will some members benefit from participation?

Identify likely participants by

B U S I N E S S B O O K S U M M A R I E S 5

function or position first, thenby individuals whose opera-tional categories are most like-ly to further the goals of theWork-Out. It often is helpfulto provide an organizationalmap around each problem toidentify:

• Underlying processes andbusiness functions it cutsacross.

• Related areas that are notcurrently involved butcould be.

• Who will benefit mostfrom achievement of thegoal.

• Who else may need to beinvolved.

The final group who can playa role in Work-Out consists ofTown Meeting participants.This group includes thesenior-level management ofkey functional areas; it is"optional," but it probably isbest to invite them to partici-pate in the meeting.

The figure below gives a

sample time line for a full-length Work-Out, and listswhich of the participants areinvolved at each stage.

In brief, the planning stagetakes 30 days; the conductingstage requires one to threedays; and the implementingstage is spread over 90 days,punctuated by the threereviews.

Now let's discuss the planning stage in moredetail. Most companies facean identifiable problem withan unidentifiable cause. Oncethat problem has been identi-fied, a senior leader forms asmall design team to agree on key issues to be tackled,identify participants, commu-nicate expectations of whatpeople will do at the event,and prepare business leadersfor their roles.

The design team can also pulltogether data analyzing rootcauses and quantifying thepotential gains in differentareas of the Work-Out. Ifthere is good communicationamong teams, the amount of

advance planning can be mini-mal, because rapid feedbackwill enable the teams to adjusttheir activities as feedbackwarrants.

An outline of the plan shouldinclude a business problem,such as process improvement,and a written goal. It shouldalso describe the estimatedimpact if the improvementsare achieved, as well as several likely improvementopportunities or problemareas. For quick results, thetime line for implementationshould be 12 weeks or less.

If you do not already knowwhich business problem topursue, there are five ways togenerate a list of businessissues:

1. Identify performance gapsin business plans, budgetsor other key performancemeasures.

2. Interview customers, bothinternal and external, to clarify expectations and identify areas ofimprovement.

6 A U D I O - T E C H

SAMPLE TIME LINE FOR A FULL-LENGTH WORK-OUT

3. Meet with managers ofother areas to reviewprocesses that cut acrossfunctional boundaries.

4. Benchmark performanceagainst competitors.

5. Ask staff what is limitingbusiness results.

An urgent and compellingissue makes the best Work-Out target. The following arekey criteria:

• It is important andurgent, not just "nice todo."

• The topic is broad enoughfor brainstorming, not asingle, well-defined taskor narrowly stated prob-lem.

• The objective is animprovement in actualperformance, not just animprovement in an arealike planning or training.

• Some aspects of theimprovement can yieldresults right away.

The purpose of the planningphase is to answer one ques-tion: What is the objective ofthis Work-Out in bottom-linebusiness terms? For example,"improving customer service"is too vague and unclear. But"implementing the predeter-mined customer responsescript" is too narrow.

The criteria for a Work-Outgoal can be expressed in aSMART goal statement. Thatis, it must be a Stretch goal.It must be Measurable,Achievable, Realistic, andTime-related.

Here are some SMART goalsfrom a variety of organizations:

• Reduce average costs perrepair by more than 10percent year over year.

• Increase productivity by20 percent while main-taining service standards.

• Reduce cycle time forclient proposals by 50 per-cent within four weeks.

To double-check your SMARTgoal, estimate its businessimpact. This is an estimate ofthe bottom-line impact of yourgoal. For example, if the goalis to reduce average costs perrepair by 10 percent, the busi-ness impact can be calculatedas follows:

1. Determine the averagecost per repair.

2. Determine the averagenumber of repairs permonth.

3. Multiply these two num-bers by 12 and get theaverage repair costs peryear.

4. Take 10 percent of thisnumber.

This business-impact numberprovides motivation andexcitement for Work-Out par-ticipants. It helps them seethat they are not just engag-ing in an exercise, but helpingto put some real money on thebottom line.

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4. CONDUCTING A WORK-OUT

Now let's discuss how you canconduct a Work-Out. Thereare five basic steps in thisstage:

1. The Introduction at theopening session includes a

welcome by the lead facilitator, an overview ofthe methodology and thebusiness issue to beaddressed, related back-ground information, and a warm-up exerciseintended to lighten whatcan become a tense andanxious atmosphere. Thekey ground rules andprinciples include "nosacred cows," "no turf bat-tles," and "no blaming orcomplaining."

2. The Small Group IdeaGeneration phase focuseson initial brainstorming.The teams identify thetopics or opportunities thesession can address bydeveloping a list of top 10ideas or possible opportu-nities for achieving theassigned goal. Once theideas have been writtendown, ideas can be catego-rized and prioritized usinga Pay-Off Matrix, a pow-erful tool for prioritizingideas. As we've alreadydiscussed, this matrixallows you to compareideas based on whetherthey are easy or tough toimplement, and whetherthe pay-off is small or big.

3. The Gallery of Ideas steptakes place when each ofthe small Work-Out teamsshare their preliminaryideas with the rest of thegroup at the session. Eachteam lists its top 10 ideason a wall of the meetingroom. In the team presen-tations, the spokespersonexplains the rationale foreach idea. This shouldtake about 10 minutes, followed by a 10-minutequestion-and-answer period. As teams’ presen-tations are made, partici-pants should resolve any

B U S I N E S S B O O K S U M M A R I E S 7

duplications or overlaps.Then the group votes onthe ideas. Participantsuse dots or stickers to votefor the top four ideas fromeach team.

4. The ActionRecommendations stageoccurs next. For the bal-ance of the time leadingup to the Town Meeting,the teams work to developthe four ideas thatreceived the most votes.The teams can do "dryruns" of their presenta-tions to anticipate thetough questions and challenges they will faceabout the risks and payouts. During thisphase, the team shouldconsider the followingquestions to strengtheneach recommendation oraction plan:

• What is the probabilityof success? Are thereother ways to increaseit?

• Can the plan be trackedand measured?

• What are the likelyobjections?

5. At the Town Meeting,each team will present itsrecommendations andaction plans to the spon-sor, champion, and otherkey business managers.The sponsor will thenmake decisions on thespot. The presentationincludes the recommenda-tion, the business issuethat it addresses, thefinancial pay-off and other benefits, the risks,the way that the resultswill be tracked and mea-sured, and the action plan for implementing the

recommendation. Theaction plan should includethe name of the person onthe team who has volun-teered to "own" the plan.At this point, the sponsorand other managersshould ask clarifying ques-tions as needed to ensurethat they understandwhat change is being rec-ommended, and to ensurethat the team hasexplored all the availableoptions. The sponsor thenhas to make a yes or nodecision on that recom-mendation. If the sponsorsays no, he should explainthe reasoning behind hisdecision to the team.Occasionally, the sponsormay need to ask the teamto do more research beforereceiving an unqualifiedyes. If this is the case, thesponsor must set a specif-ic, short time frame forcompleting the work andmaking a final decision.This is not an excuse toput off a decision formonths. The sponsormight say, "I want to sayyes, but we really need thefinancial implications tobe spelled out more clear-ly. Get the numbers andlet's meet tomorrow at8:00, and if they look good,my decision will definitelybe yes."

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5. IMPLEMENTING WORK-OUTRECOMMENDATIONS

Let's assume that you've heldyour Work-Out and you'veapproved an ambitious list ofrecommendations. This is notthe end of a successful Work-Out; it's the beginning. Thepower of Work-Out lies in tak-ing the ideas unleashed in theTown Meeting and translating

them into real organizationalchange and real results.

Four elements of Implement-ation will produce success:

First, make accountabilitystick. This means immediate-ly confirming who will beresponsible for implementingeach recommendation at thegrass roots level. It also meanspulling together the team —the champion, team leader, andrecommendation owner — thatwill be on the hook for the rec-ommendation for the nexteight to 12 weeks.

Second, at the end of the TownMeeting the sponsor needs tomove immediately into workplanning and to confirmassignments so that there isone individual accountable foreach idea. All of the actionsteps must be assigned andgiven deadlines. All recom-mendation owners should havea stake in the business issuebeing addressed. At severalGE units, a two-hour workplanning session takes placeimmediately after the TownMeeting — before people canget back to their offices or runto airports. Anyone who can-not stay is given some briefinstructions about puttingtogether a work plan with anassignment that is due in 24hours.

The third aspect of implemen-tation is the challenge of managing the organiza-tion’s cycle of energy. Peoplewill encounter all forms ofresistance to change, some subtle, some not, as they setabout their assignments.Sponsors and championsshould support and coach rec-ommendation owners throughthese difficulties.

Finally, the fourth element is

8 A U D I O - T E C H

to provide managementoversight and support.Some goals have a clear scopeand narrow focus. Others don’tand, instead, involve makingmajor progress on a complexissue in a short amount oftime. For example, a programsuggested at Armstrong WorldIndustries was far too large tobe implemented on a nation-wide basis within 12 weeks.Instead, the sponsor suggestedthat the recommendationowner focus on one or twomajor metropolitan areas first,and get the program up andrunning there.

To implement the recommen-dations, you also need to selectthe implementation teammembers. The team needspeople who:

• Are close enough to thefront line to understandthe technical aspects of thesubject matter.

• Have the potential to chal-lenge the status quo andbe innovative and creative.

• Are likely to participateactively and effectively ina team without trying todominate it.

• Are strongly orientedtowards action and results.

Setting up the action planinvolves all of the usual proce-dures. Assign accountabilityfor each step, determine thetime frame for each activity,and test the plan for complete-ness. Then the recommenda-tion owner reviews the planwith the champion and, if nec-essary, enlists the champion’shelp in smoothing the way forimplementation. During thereviews, at 30, 60, and 90 days,each recommendation ownerreports on his progress to the

champion and the sponsor. Ifany obstacles have emerged,they can be removed before theproject stalls.

The implementation phase isthe key to the success of Work-Out. No one will want to doanother Work-Out if the recom-mendations approved at theTown Meeting are not imple-mented successfully. When allof the participants performtheir roles well, the companybegins to develop a sense ofinfinite possibility.

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6. CUSTOMIZING WORK-OUTFOR YOUR ORGANIZATION

Of course, not every companyis like GE, so it is essential tocustomize Work-Out to yourown organization, situation,and problems. This entailsconsidering several key vari-ables and deciding how tomake constructive adaptations.

One variable is time. Someproblems are too complex to behandled in a three-day session,much less a one-day blitz. Insuch cases, an "extended"Work-Out may be used. GELighting used this approach toreduce product breakage.

The problem was that nobodyreally understood the problemof breakage or how well thepotential solutions would work.Thus, the first stage was a one-day "getting organized"Work-Out. Cross-functionalteams, each focused on a prod-uct category, met to reviewexisting data and discuss possi-ble issues. The recommenda-tion was to develop a specificwork plan for the next fewweeks on how to find out whatwas really going on.

Teams went about researching

the breakage situation. Thesecond Work-Out session identified several solutionsover two days, among them therecommendation to use inflat-able airbags to fill the spacesbetween boxes that causedloads to shift and bulbs tobreak. Relatively simplechanges in pallet configura-tions — to make them conformmore to the configuration offorklifts — also were recom-mended to reduce breakage. Inall, the teams identified mil-lions of dollars worth of sav-ings at the concluding sessionand then implemented themover the next several months.

Another key variable is dis-tance. One example is fromSmithKline Beecham, whichhad several locations scatteredacross the U.S. and the U.K.The issue was structural reorganization after a merger.The first stage consisted of atwo-day session of the top 25managers. A number of possi-ble organizational designs wereconsidered, and the teamapproved one overall design.Stage two was a virtual Work-Out in which people weresolicited for their ideas onorganizational design and howthat design might reduce costs.Each unit in the overall groupwas given a month to accom-plish this. At the end of themonth, each manager froze thelocal Lotus Notes used for thevirtual session and developed aset of recommendations aboutnext steps.

Besides time and distance, thethird major way to create vari-ations on Work-Out is to "flexthe focus." That is, shape theprocess around three differenttypes of topics and goals:

1. Bureaucracy-busting.

2. Process improvement.

B U S I N E S S B O O K S U M M A R I E S 9

3. Strengthening the valuechain.

Despite the logical appeal, itisn’t always clear that bustingbureaucracy has a measurablepay-off. By "dollarizing"bureaucracy — including sometime to assess bottom lineimpact — you can select ideasthat make a real cost-cuttingcontribution.

Bureaucracy is often the resultof the addition of hundreds of small procedures that draintime, energy, and profitability.By "blitzing" — encouraginglots of ideas for small improve-ments that can be evaluatedand implemented easily —enormous savings and efficiencies can be realized.

Process improvement Work-Outs go very nicely withbureaucracy-busting becausethe rationale is that the com-pany's people must continue tothink about how they can dothings better. That’s processimprovement, which can comein "big ideas," but most oftencome in small increments ofcontinuous improvement. The Work-Out can be designedaround the process and, byextension, the steps in theprocess. Further, certain

aspects of a business requiresome processes to run parallel.New product introductions arean example. The processes canbe mapped to show points ofconvergence and divergenceand critical points along theway.

The teaching of process map-ping and process thinking canbe handled by incorporating atutorial on how to do processmapping into the agenda. Anexample of a process map forbuying a car is shown below.

As process thinking becomesembedded in your company, the natural next step is to con-sider the overall context inwhich processes occur: thevalue chain of suppliers andcustomers. Value chain Work-Outs can be organized by:

1. Sketching out the key constituents in your valuechain. Who are the mostcritical suppliers and significant customers?

2. Selecting a few partnerswith whom you can start adialogue.

3. Listening to their concernsand understanding theirperspective.

4. Creating a joint team witha few people from eachcompany.

5. Holding the event andstarting the process.

6. Reviewing initial effortsjointly and keeping theprocess going.

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7. LONG-TERM PAY-OFF:CREATING THE LEADERS ANDTHE CULTURE

Transforming an organizationto make it more competitive,productive, or innovative inany way means having betterleadership. Those who haveleadership roles in an organiza-tion need to step forward andstart a creative chain reactionthat gets more and more people to change as well.

The starting point is to createthe "leadership brand" — theexpectations of what leadersshould achieve and how theyshould do it. At GE, the con-versation began about "speed,simplicity, and self-confidence."

To give the brand clear defini-tion, a series of leadership-assessment and developmentprograms was developed. TheGE Capital program, called"Leadership Challenge," wasbased on a one-day workshopand an assessment instrumentthat translated the GE mottointo 20 specific behaviors.

During the meeting, managerswere given the results of theassessment by subordinates,peers, and bosses. This processgave senior leaders a sharperpicture of the brand and whatthey needed to do to realize it. You can use four steps to replicate the GE success inleadership brand-building in

10 A U D I O - T E C H

PROCESS MAP EXAMPLE: BUYING A CAR

your own organization:

1. Define, clarify, and com-municate the leadershipbrand to everyone with-in the firm. Makeemployees aware of whatthey should expect fromtheir leaders.

2. Assess managersagainst the leadershipbrand. Identify the gapbetween actual anddesired performance.

3. Invest in developmentprocesses to help man-agers learn to live withthe brand. Set out goalsand a time line for eachmanager’s developmentprogram.

4. Reinforce the leadershipbrand. Clear rewardsand clear consequencesreinforce the brand.Promote people whodemonstrate the brandand fire those who do not.

In addition to creating leaders,Work-Out can also change yourcompany's culture to one thatis driven by speed and innova-tion. Here are the 12 stepsthat you can use to embed theWork-Out process into yourculture:

1. Approach Work-Out asan adjective ratherthan as a noun. AsWork-Out moves from pilot to program stage,remember that it is not abusiness goal; it is a betterand faster way to reachyour business goals.

2. Stack the deck for suc-cess. Begin at a comfortlevel that will enable youto demonstrate the bene-fits to be gained. Oftenthat means starting with a

pilot test at a site whereyou can start right away.The site should also be iso-lated from the rest of thebusiness, so that leadershave the authority to enactrecommendations and seethe results clearly.

3. Use facilitators to showthe way. Three differentkinds of facilitators offeran unbiased view ofprogress. External facili-tators bring a constructiveperspective from outsidethe firm, cross-unit facili-tators bring the perspec-tive of different disciplines,and internal facilitatorsare leaders within thefirm.

4. Build in enough sup-port. Work-Out teamsneed political support towork across functions andboundaries. They alsoneed administrative support to handle detailslike scheduling conferencerooms and setting up travel arrangements.

5. Help managers getready to deploy Work-Out. Executives needtraining to be able tocoach, mentor, and makedecisions in the new Work-Out environment.

6. Set specific deliverygoals. Work-Out movesfastest when the CEO laysdown a goal for it, such as"You will run five work-shops this month," or "Youwill spend 10 percent ofyour time in Work-Outactivities."

7. Publicize the successes.The best way to get buy-infrom skeptics is to provehow well it works. JackWelch highlighted his

commitment to Work-Outin annual reports, speech-es, media interviews, employee videos, and so on.

8. Align your actions withyour commitment. As aleader in the Work-Out initiative, make sure youractions demonstrate the high level of your commitment. Passing theprogram off to someoneelse won’t work.

9. Reach the tipping point.Critical mass occurs whenenough employees — typi-cally 3 to 5 percent — haveexperienced Work-Out sothat the ideas becomeembedded in their wordsand deeds. It is not a mat-ter of the CEO’s personalbeliefs; it’s the instinctiveresponse of employees thatthis is now "the way we dothings."

10. Resource your Work-Outs. Give the sessionsthe kind of resources theyneed, such as facilitators;travel, meals, and facili-ties; and enough time forparticipants to be awayfrom other work projects.

11. Share the knowledgeyou gain. The purpose ofWork-Out is to generatenew and better ideas —innovative methods, waysto increase productivity,cut costs, and so on. Theseideas might be useful toother parts of the organi-zation that did not participate in the Work-Out. One firm created a Web site to post theideas from all of its Work-Outs for everyone in thecompany to read.

12. Apply Work-Out toother programs. When

B U S I N E S S B O O K S U M M A R I E S 11

management shifts toother initiatives, Work-Out's approach to engag-ing employees should beused to make the newchanges happen. Forexample, when GElaunched Six Sigma, itimplemented the newtools and disciplines fasterbecause employees andmanagers were alreadycomfortable with dis-cussing ideas and making quick decisions.

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As we've discussed, Work-Out is based on a

remarkably simple series ofsteps that can yield someextraordinary results. You can

easily get started without lotsof planning and structure.

Just bring people together towork on a common problem.Then, allow them to recom-mend specific changes to maketheir jobs easier. Share theideas with a leader who makesdecisions on the spot. Thenappoint owners for each idea to make sure that that thedecisions are translated intoaction.

Stay focused on business goals,ensuring that Work-Out is ameans to those goals, not anend in itself. Expect resis-tance, and turn it into support.Over time, Work-Out will nolonger seem new. GE has usedWork-Out for more than a

decade, and it is a core part ofits culture.

Moreover, with every Work-Outyour company completes, it willbecome clearer that it is not abusiness fad. It is a set ofprinciples, tools, and actionsthat helps managers reachtheir goals faster by engagingemployees. It can be the foundation of some of the most exciting and positiveexperiences that you will havein your company, and it canprovide the cost savings thatensure your business will survive any competitive threat.

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ABOUT THE AUTHORS

Dave Ulrich is a professor of business administration at the University of Michigan School of Business and theauthor of the best-selling Human Resource Champions, Results-Based Leadership, and The HR Scorecard.

Steve Kerr is Chief Learning Officer and a Managing Director of Goldman Sachs. he was previously VicePresident-Leadership Development and Chief Learning Officer for General Electric, with responsibility for GE’srenowned Leadership Development Center at Crotonville.

Ron Ashkenas is a managing partner of Robert H. Schaffer & Associates. A leading consultant to CEO’s on orga-nizational transformation, he also is the senior author (with Ulrich, Kerr, and Todd Jick) of The BoundarylessOrganization.

The GE Work-Out summarized by arrangement with The McGraw-Hill Companies, Inc., from The GE Work-Out: How to Implement GE’s Revolutionary Method for Busting Bureaucracy and Attacking OrganizationalProblems — Fast! by Dave Ulrich, Steve Kerr, and Ron Ashkenas, with Debbie Burke and Patrice Murphy.Copyright © 2002 by The McGraw-Hill Companies, Inc.

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